Campbell Soup Co. has entered into an agreement to acquire Bolthouse Farms from a fund managed by Madison Dearborn Partners, LLC, a private equity firm, for $1.55 billion in cash. Founded in 1915, Bolthouse is a vertically integrated food and beverage company focused on developing, manufacturing and marketing proprietary, high value-added natural, healthy products. The company has leading market positions in fresh carrots and super-premium beverages in the U.S., along with a growing presence in refrigerated salad dressings.
The acquisition of Bolthouse will provide Campbell with significant presence and a new platform for expansion in the rapidly growing, $12-billion market for packaged fresh foods. The addition of Bolthouse’s market-leading super-premium refrigerated beverages will complement Campbell’s successful “V8” beverage business and will create one of the industry’s largest healthy beverage platforms, with annual sales of approximately $1.2 billion. Bolthouse’s strong market position in fresh carrots in the U.S. and Canada will also provide an attractive opportunity for growth with value-added products in healthy snacking.
Denise Morrison, Campbell’s president and chief executive officer, said in a prepared statement, “Bolthouse is a great strategic fit with Campbell. Its business platforms, capabilities and culture are well aligned with the core growth strategies we announced last year. Its strong position in the high-growth packaged fresh category complements our chilled soup business in North America, and offers exciting opportunities for expansion into adjacent packaged fresh segments that respond directly to powerful consumer trends.”
Headquartered in Bakersfield, Calif., Bolthouse Farms has nearly 100 years of farming expertise and innovation. It markets and sells its beverages and dressings under the “Bolthouse Farms” brand, and its carrots under the “Bolthouse Farms,” “Earthbound Farms” and “Green Giant” brands, as well as private label offerings. For its fiscal year ended March 31, 2012, Bolthouse had sales of $689 million and adjusted EBIT of $92 million. From 2010 through 2012, the company had compound annual net sales growth of 7 percent. It employs about 2,100 people.
Campbell plans to operate Bolthouse Farms as a separate business unit. Members of Bolthouse’s senior management team, including President and CEO Jeff Dunn, will remain with the company. Dunn has built a strong team with deep expertise in beverage and consumer packaged goods, and he will report directly to Morrison.
Dunn said, “We are delighted to be joining Campbell and its family of beloved brands. Campbell’s 140-plus year history of providing high-quality foods and beverages to consumers complements Bolthouse’s history of growth and innovation in fresh and packaged fresh foods. We are excited by the alignment between our strategic visions and the significant opportunities for accelerated growth for both companies.”
Campbell will fund the acquisition of Bolthouse through a combination of short- and long-term borrowings. The closing of the transaction is subject to regulatory approvals and customary closing conditions and is expected to occur in late summer 2012. Including the impact of purchase accounting and suspension of the strategic share repurchase plan, Campbell expects that this acquisition will add approximately $0.05 to $0.07 cents per share to its adjusted net earnings in fiscal year 2013, before transaction costs. This estimate is subject to the finalization of the closing date and final closing balance sheet valuation.
The acquisition of Bolthouse Farms was not contemplated in Campbell’s previous guidance concerning its projected financial results for fiscal 2012. The company said today that, excluding acquisition costs, it remains on track to deliver results consistent with that guidance, with fiscal 2012 sales growth expected to be near the low end of the previously forecast range of 0 to 2 percent; adjusted EBIT expected to decline at a level near the low end of the previously forecast range of 7 to 9 percent; and adjusted EPS expected to decline at a level near the upper end of the previously forecast range of 5 to 7 percent.
Morgan Stanley acted as the exclusive financial advisor to Campbell in this transaction. Davis Polk & Wardwell acted as Campbell’s legal counsel. Bolthouse Farms was advised by Credit Suisse and Goldman Sachs and Kirkland & Ellis LLP acted as legal counsel.
